Providence operating loss €7.2m

Operating losses at leading Irish explorer Providence Resources jumped by more than 30% last year, to just over €7.2m.

On a pre-tax basis, the Tony O’Reilly Jnr-led company’s losses narrowed by 6%, to just under €7.8m and its basic loss per share fell from 39.68c to 4.33c.

The total loss for the year — attributable to equity holders — amounted to almost €2.8m, down from €24.2m in the previous year. A net credit of €4.97m was attributed to the profit from the sale of the firm’s UK onshore operations.

Most of the current focus on Providence relates to its ongoing attempts to nail down a development partner for the highly-rated Barryroe field off the Cork coast.

Yesterday’s update reiterated that management is in “advanced discussions” with a select number of international exploration and production companies, adding that these active negotiations have been encouraging.

A new phased approach to Providence’s development plans for Barryroe has been helpful, with an initial focus on an early-staged development programme building up to full field development — with projected ultimate production rates of up to 100,000 barrels of oil per day (bopd). The new approach will target an initial production profile of 30,000 bopd, with substantially reduced initial capital expenditure and an accelerated timeline to get to first oil.

Analysts suggested the amended phased approach illustrates a toughening market for consolidation opportunities, a point supported by Mr O’Reilly in comments made yesterday.

“Overall, the farm-out and M&A [merger and acquisition] market in the oil and gas sector remains challenging, with caution evident across the sector.

“The majority of worldwide oil and gas investments and M&A deals have been concluded either in the North American shale gas and oil sector or in the East African region, with very few major farm-out deals being completed in the North-West European sector over the past year,” he said.

Meanwhile, Lansdowne Oil & Gas — Providence’s current junior partner at Barryroe — also published annual results for last year yesterday, showing a drop in cash balances from £5.55m (€6.92m) to £2.48m, though after-tax losses narrowed from £1.09m to just over £800,000.